Stop Charging an Hourly Rate!
The thoughts of a freelance web designer on why charging an hourly rate only leads to more problems than it's worth.
Like many web designers, developers, copyeditors and general freelancers, I used to charge by the hour. However, over the last six months I’ve made a critical change in how I price each of my client projects.
I’d like to share what I’ve learned and, hopefully, bring you around to this much better way of pricing. It gives me less stress, more income and I sleep better at night…sound good?
Where it All Started
I’ve been charging by the hour since I started working at a large American SaaS company back in 2012. Before that, my pricing was a mess. I’d either take a stab at what to charge (without any actual research) or just make a bad guess.
I charged by the hour from 2012 until late last year, when the pricing lightbulb finally switched on in my head.
You know what I found in that lightbulb moment? Pricing per project.
Why Price Per Project?
If you’re a remote freelancer (on-site freelancers are a thing too), I’m appealing to you right now. By charging per hour, you’re putting a very specific value on the work you do. If you charge $50 an hour, that’s exactly what your work is worth.
There a fe problems that come from putting a specific hourly value on your work. Here they are…
Clients See You as an Expense
As a freelancer, the last thing you want to be viewed as is an expense. 99% of the time, an expense is hard to justify. I’m sure there a few a things that come out of your bank account every month that shouldn’t, but they do anyway. Try justifying them to yourself, I dare you.
So being seen as an expense is bad, but how do we solve that problem? It’s actually quite simple, but you’ll need to change your work philosophy a little.
To stop yourself being seen as an expense, you need to become an investment.
Have a look at my site, the entire thing is about how the client will come out of our relationship with a better business that has more customers, not some HTML/CSS templates and a domain name.
It’s Difficult to Change Your Pricing
As much as some of us would like to change our pricing, it can be very tricky. You don’t want to come across as though you’ve ramped up your rates for no good reason, but you also don’t want to keep them the same because of everything I mentioned above.
So how do you do it? The best way I’ve found is to let your current clients know that once the project your doing for them is complete, the way you price your services is going to change.
Here are a few ways to up your rates and not seem like a money-grabber:
- Up them gradually over time. Maybe £500/$1,000 per project.
- Don’t go with an hourly rate. The problem with this model is you’ll be seen as an expense (refer to above).
- Let your current clients know that your rates will be going up. This works better if you do what I said above and up them gradually.
- I’ve found it’s easier to try the new pricing structure on new clients, as they have no preconceptions of how you charge.
Something to always remember is that as time goes on, your skills and expertise improve. So that means you should be upping your rates every 6 months to a year.
If you stay with the same pricing for 5 years, you’re not going anywhere fast…if at all!
This is your business and you’re the boss. At the end of the day, charge what you think you’re worth, but make sure you’re making enough to live and make a profit at the same time.